Forums vs. Fountains

Universities can help boost a mature industrial economy by reinvigorating the flow of new ideas in the community. But universities can approach this task in different ways, each leading to vastly different outcomes.

Long before Silicon Valley, cities like Akron, Ohio, and Rochester, New York, were known as America’s centers of innovation and high technology. Call them “Silicon Valleys of the Second Industrial Revolution.” Ambitious and technologically minded entrepreneurs flocked to these cities, hoping to tap into the excitement and prospect of making one’s name in emerging technologies and industries. Years later, companies like Goodyear (based in Akron), Kodak (based in Rochester), and other successful ventures that emerged during this period would become the industrial giants of the 20th century.

But by the 1970s, the area known as the country’s “Manufacturing Belt” had turned into the “Rust Belt.” Stiff foreign competition forced companies to start distancing themselves from their home communities. Jobs moved to cheaper locations. Akron’s manufacturing employment fell by 29 percent in the five years between 1977 and 1982, while Rochester lost 17 percent in the next five years between 1982 and 1987.

To stem this dramatic decline, government and business leaders looked to local universities to support companies’ innovation efforts and bring back the creative environment of the past. Local leaders needed to take action as their cities lost ground to the “Sun Belt” and parts of the West Coast, which were quickly gaining reputations as hosts to more interesting and innovative conversations. They understood that businesses’ ready access to knowledge, information, and highly skilled workers is crucial to giving mature industrial economies the boost they sorely needed. So, local leaders wanted universities to become the anchor that would bridge and diffuse knowledge among companies.

How exactly universities would effectively carry out this role, however, was not clear. “There was no playbook for that,” says University of Chicago Booth School of Business professor Sean C. Safford. In “Forums vs. Fountains: The Evolution of Knowledge Networks in Akron and Rochester,” Safford compares the experiences of two well-matched cities that went through the rise and struggle of industrial change and called on local universities to revive the cities’ economies.

The approach taken in each city was very different. Aiming to fill the void left by the withdrawal of major research-oriented companies, universities in Akron played the central role of a “fountain” from which new ideas and products would emerge. Academic institutions in Rochester, on the other hand, took a less assertive approach, that of building a “forum” that facilitates and strengthens relationships among local companies and universities with the hope of stimulating the innovative process.

This divergence in tactics is partly responsible for why the two cities’ knowledge networks evolved very differently, with one proving to be surprisingly more successful than the other. “It challenges the perceived wisdom of what policymakers think the role of universities should be,” says Safford.

A Picture of Two Knowledge Networks

Akron, Ohio, was known for much of its history as the “tire capital of the world.” Goodrich was the first company to grow into a large establishment at the turn of the 20th century, supplying rubber tires to the U.S. Army for its new fleet of airplanes. There were also at least 20 other small and midsize rubber businesses that emerged during this time. Among them were several firms that would go on to become internationally known industrial companies, including Goodyear and Firestone tire and rubber companies, each of which grew to prominence as suppliers of tires to the automobile industry.

Similarly, Rochester, New York, was home to a cluster of big-name companies in related technologies. Bausch & Lomb was founded in the 1850s and is the country’s first mass producer of eyeglasses, goggles, and microscopes. Kodak followed a few decades later, eventually becoming the world’s leading producer of cameras and photographic film. Haloid Corporation, which made specialty photographic paper to fill a niche neglected by Kodak, eventually transformed itself in the 1960s into Xerox, known the world over as the leading brand of photocopiers.

All of these companies fared badly in the 1970s and 1980s in the face of foreign competition. In response, they acquired other related businesses and at the same time built new research capabilities in advanced materials and applications. Nonetheless, a devastating number of manufacturing jobs moved to lower-cost regions, as did some of the companies’ research and development activities to places thought to be more cutting edge.

Community leaders in both cities grew fearful that their cities would follow the same “hollowing out” that their Rust Belt neighbors had begun to experience and knew that something had to be done. At the same time, they understood that the world was shifting toward a knowledge-based economy where information and ideas flow abundantly across people and organizations. Thus, the development of the cities’ knowledge networks was vital to their recovery.

To gauge the extent to which local universities, multinationals, and smaller technology companies were talking to and collaborating with one another in Akron and Rochester, Safford analyzed the network of coauthored scientific papers published by individuals in local companies and their collaborators in both cities. The data were collected over three-year intervals at two points in time: 1980–82 and 2000–02.

Safford’s analysis shows that Akron’s network expanded from about 85 organizations in the early 1980s to 100 organizations 20 years later. This is in stark contrast to Rochester’s network which doubled to 516 organizations during the same period. The differences are even more striking in terms of the number of publications. The number of authors per organization stayed the same in Akron but doubled in Rochester over the two periods.

There also were important changes in the structure of the networks. Akron’s network was remarkably insular and disconnected in the early 1980s. About 86 percent of the collaborations by Akron’s multinational tire companies were with each other, while 78 percent of the universities’ ties were with themselves. Even worse, 95 percent of the collaborations of small to midsize local technology firms were with each other. There were no ties between smaller technology firms and universities and very few between the multinationals and the universities. Rochester’s network looked quite similar, with the exception that there were more ties between the local technology companies and multinationals.

Twenty years later, Akron’s tire companies were far less insular, but rather than increasing their ties significantly with local groups, they chose to collaborate more with companies outside the region as well as with non-U.S.-based firms. The total share of local ties decreased in Akron from 86 to 75 percent over the two periods, but increased in Rochester from 74 to 81 percent. In Rochester, almost all of the increase in local ties is due to increased collaborations with local organizations, including significant increases in collaborations between multinationals and universities and between smaller technology firms and universities.

Drivers vs. Facilitators

Why did the knowledge networks in both cities evolve differently? Akron followed what Safford calls the “fountain approach,” in which universities aim to become the city’s central hub of ideas by pulling together research from otherwise disconnected groups, then identifying and developing ideas that might be of commercial interest. For instance, companies that participated in the Edison Polymers Innovation Center at the University of Akron were given a “window on technology” and first rights to intellectual property that was coming out of university labs.

Over time, however, it became apparent that many of the local businesses already had very sophisticated research and development operations of their own that were dedicated to the search for usable discoveries, not the type of longer-range projects that were coming out of universities. Not that the companies were uninterested in collaborating with academic institutions, but their preferred affiliations were wherever the best research was taking place regardless of location. There also was very little effort toward developing relationships with local entrepreneurs. For instance, when tire makers spun off their commodity plastic businesses, these new companies decided to acquire other companies that would allow them to integrate new capabilities, rather than team up with local firms to develop those same skills.

Thus, the intended goal of the fountain approach—of the university driving innovation in Akron—was never realized. “The university asserted a new role, but the companies never really accepted that role,” says Safford.

Rochester’s universities, on the other hand, acted behind the scenes as facilitators of conversations rather than drivers of the innovation process. They provided a forum for the business community to exchange ideas and collaborate with one another, mainly through the creation of consortia and the encouragement of joint work between the universities and industry researchers. Through such ties, the universities were able to build relationships among local players that generated a higher level of trust. This was the key to Rochester’s relative success. “The universities had a lot of social capital, legitimacy, and credibility with different people, companies, and organizations, and they used that to bring together disconnected members of the community,” says Safford.

The Center for Optics Manufacturing at the University of Rochester’s Laboratory for Laser Energetics was one of Rochester’s major university-industry partnerships and was set up through funds lobbied for by the university and Kodak. The goal was to learn how to process glass using computer control, and the center formed a consortium of companies interested in developing such computer-aided optical manufacturing technologies. In all, 20 companies were involved in the effort. Another major partnership was the Center for Advanced Technology in Electronic Imaging Systems, which eventually focused on promoting entrepreneurship and developing ties with smaller firms.

These partnerships and relationships did not happen overnight. But because Rochester’s universities kept the pressure on to build and maintain these connections, the boundaries between companies started to soften. “It was a learning process that took place over two decades,” Safford says.

A Fruitful Approach

Although their importance has declined over time, both cities remain valuable centers of innovation with respect to their core technologies. However, Akron’s standing may be at risk.

Rochester has managed to retain more innovation activities than Akron has, contributing about 9 percent of the world’s optical electronics patents between 1996 and 2002, compared with 5 percent of all polymer patents for Akron in the same period. Moreover, Rochester’s optical electronics firms have won more Small Business Innovation Research awards and garnered a significantly greater share of venture capital funds than Akron’s polymer-related companies. More new high-technology companies have emerged in Rochester than in Akron. Because these start-ups provide intellectual services to large companies, they are building the physical, human, and social capital necessary to develop their own products and successfully commercialize them.

The good news is that even communities that seem to be stuck in the Rust Belt need not be captives to economic fate and inevitability, says Safford. Through initiatives such as the university-industry partnerships that were forged in Rochester, communities can and should take stewardship of their future.

“Forums vs. Fountains: Universities and the Evolution of Knowledge Networks in Akron and Rochester.” Sean C. Safford.